Social Security: Bright spots and trouble on the horizon
Social Security got a lifeline extension, but warnings remain about sufficient funding over the long haul.
The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance trust funds — currently almost $3 trillion — are projected to become depleted in 2035 with 80% of benefits payable at that time, according to an annual report from the Social Security Board of Trustees. That's a year later than the trustees projected last year.
The retirement fund is estimated to become depleted in 2034, in line with last year’s estimate. Seventy-seven percent of benefits would be payable at that time, according to the trustees. By contrast, the disability fund is forecast to become depleted in 2052 — 20 years later than last year’s estimate of 2032. Ninety-one percent of benefits would be payable at that time, the trustees wrote in their annual report.
The trustees attributed the improved outlook to favorable trends in the disability program; applications been declining since 2010 and the number of beneficiaries receiving payments has been falling since 2014.
Still, congressional action may be necessary to head off potential shortfalls. Annual costs are projected to exceed income in 2020 for the first time since 1982, requiring the administration to dip into reserves, according to the trustees.
That spells trouble for the growing number of elderly Americans who rely on Social Security in retirement. Roughly nine out of 10 Americans age 65 and older receive Social Security benefits, which represent roughly one-third of the income of the elderly.
“The trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them,” Nancy Berryhill, acting commissioner of Social Security, said in a statement accompanying the report’s release.
In 2018, 63 million people received benefit payments, which totalled nearly $989 billion, according to the report.
Social Security’s board of trustees is usually comprised of six members, though two public trustee positions are currently vacant. The other four positions are held by Berryhill, Secretary of the Treasury Steven Mnuchin, Secretary of Health and Human Services Alex Azar II, and Secretary of Labor Alexander Acosta.